We recently published a list of 8 Best Video Conferencing Stocks To Buy According to Analysts. In this article, we are going to take a look at where Verizon Communications Inc. (NYSE:VZ) stands against other best video conferencing stocks to buy according to analysts.
An Overview of The Video Conferencing Industry
Video conferencing software connects two or more parties virtually through video and audio over an internet connection. During the COVID-19 pandemic when lockdowns shut almost everything, the video conferencing market witnessed a surge in demand. According to a report by Grand View Research, the video conferencing market was valued at around $4.21 billion in 2020 and the valuation rose significantly to around $7 billion in 2022. Moreover, as per the most recent figures. The video conferencing market was valued at $28.61 billion in 2023 and is projected to grow from $33.04 billion in 2024 to $60.17 billion by 2032, indicating a compound annual growth rate of 7.8%.
According to a BBC report published on June 3rd, 2020, during the pandemic, the usage of the video conferencing platform Zoom surged 30 times in April 2020 alone. The report further highlighted that the daily participant usage exceeded 300 million users during peak pandemic times.
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At first, the market growth was driven by the pandemic and lockdowns around the globe, which forced businesses, government organizations, and education institutes to adopt virtual modes of engagement. For instance, in May 2020, the World Health Organization (WHO) held its first-ever virtual assembly. Moreover, educational institutes used videoconferencing software to conduct graduation ceremonies.
Fast forwarding to the post-pandemic era now that the world is back to normal the video conferencing market is driven by the rise in remote jobs and e-learning. According to a report by Pew Research published on March 30, 2023, around 35% of the US workforce was working remotely in 2023. Although this figure was down from 43% recorded in January 2022 and 55% in October 2020, which is the pandemic era, the percentage of remote workers was still up 7% compared to pre-pandemic years.
Looking at the regional insights, North America held the largest market share of around 31% in 2023 as it benefits from the large organizations that are engaged in developing video conferencing software. Moreover, the region is also home to an experienced workforce capable of adopting remote work. In addition to North America, the Asia Pacific region is expected to grow at the fastest CAGR due to the growing interest in digitalization across businesses, governments, and educational institutes.
Looking ahead, the rise and recent developments in artificial intelligence, the Internet of Things, and cloud technologies are expected to further boost the video conferencing market. According to a report by the World Economic Forum, global digital jobs are estimated to grow by around 25% to reach over 95 million indicating the growth prospects for video conferencing software due to its indispensable position for remotely operating organizations.
Our Methodology
To curate the list of 8 best video conferencing stocks to buy according to analysts we used various internet rankings and our previous articles. We compiled a list of video conferencing companies that were most widely held by hedge funds, sourced from Insider Monkey’s Q2 2024 hedge funds database. Next we checked analysts upside potential for each stock from CNN and ranked our stocks in ascending order of their upside potential. Please note that the data was recorded on November 8th 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Photo by Chris Montgomery on Unsplash
Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 67
Analysts Upside Potential: 12.70%
Verizon Communications Inc. (NYSE:VZ) is a major telecommunications holding company that provides a wide array of communication, information, and entertainment services to consumers, businesses, and government entities. Its operations are divided into two primary segments: Verizon Consumer Group and Verizon Business Group.
While the Verizon Consumer Group segment engages in providing wireless and wireline services in the United States, the Verizon Business Group is designed to cater to business and government needs. Within this segment, the company provides tailored wireless and wireline services, data services, video conferencing services, and Internet of Things solutions.
The company ranks as the 6th best video conferencing stock to buy according to analysts. The video conferencing services offered by Verizon Communications Inc. (NYSE:VZ) include WITS 3 Video Conferencing, which is an interactive image and voice communication service supporting both pre-scheduled and on-demand conferences. It features 24/7 technical support and flexible reservation options for users.
The company also has a longstanding 29-year partnership with Cisco Webex Meetings, a cloud-based platform that integrates video and voice conferencing with messaging and file-sharing capabilities. This service is optimized for mobile devices, enabling users to connect from virtually anywhere.
The company released its third-quarter results for fiscal 2024 on October 22nd. The company delivered growth within its wireless service revenue and adjusted EBITDA growth. The wireless services revenue for the quarter was up 2.7% year-over-year and the adjusted EBITDA of $12.5 billion was the highest ever reported by the company.
However, its total revenue of $33.3 billion remained flat year-over-year, mainly due to tough market conditions characterized by high inflation. However, the prospects of growth for the company remain bright. Management projects that its wireless service business will also expand at a rate of around 3% this year. It is expected to be boosted further by the pending acquisition of Frontier Communications for $20 billion, which would expand its fiber network.
Lastly, its dividend yield of 6.6% remains one of the key points of attraction for investors. In September Verizon Communications Inc. (NYSE:VZ) increased its dividend by 1.9% marking the 18th straight year of dividend increase. Over the past decade, the company has increased its dividends by around 23%.
Third Point Management stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its Q3 2024 investor letter:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
Overall, VZ ranks 6th on our list of best video conferencing stocks to buy according to analysts. While we acknowledge the potential of VZ to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
